The move would help develop the backward linkage industry in the country and achieve higher realization of export proceeds

The Bangladesh Textile Mills Association (BTMA) has urged the government to provide a cash incentive for exporters of ready-made garment (RMG) items made from man-made fibre (MMF) only after ensuring that they use locally produced yarn and fabric.

They said that the move would help develop the backward linkage industry in the country and achieve higher realization of export proceeds.

BTMA, in a letter to the commerce minister on July 16, made the plea after the ministry backed the RMG makers' demand that they be provided 5% cash incentive on exports of non-cotton apparel items.

In response, the Commerce Ministry has recently written to the Finance Ministry about this issue.

Welcoming the move, the BTMA in the letter said a 5% cash incentive will help increase RMG exports and ensure the growth of overall textile and clothing sectors.

Larger share of exports of non-cotton RMG items is made using the imported fabrics and thus little value addition takes place, resulting in low foreign currency retention against exports, BTMA President Mohammad Ali Khokon said in the letter.

With the rise in global demands for MMF or non-cotton based garments, the BTMA spinning millers are producing viscose, polyester, various filament yarn and blended yarn using imported MMF and making “deemed exports” to local RMG exporters, he also said.

Besides, a good number of MMF and its raw materials pet chips (textile grades) producing mills are being set up in the country to meet local MMF requirements, he said, expressing hope that these units will come into production by the end of next year.

The previous 25% cash incentive helped develop a strong backward textile linkage industry and now the industry meets 85% and 40% of the demands for knitwear and woven fabrics respectively, Khokon noted.

The country fetched $23.21 billion and $19.39 billion from exports of knitwear and woven items respectively in the just concluded fiscal year.

He urged the government to provide a 5% additional cash incentive on exports of RMG produced from MMF considering the three stages of production-yarn from MMF, fabric from yarn, and then RMG.

According to the industry insiders, with the increase of earnings through RMG exports over the decades, the consumption of cotton has also been on the rise and still the majority of the exportable RMG items are based on cotton.

The import of MMF like polyester staple, viscose and tencel is on the rise following the rising demand amid changes in the global fashion trend, they added.

According to BTMA, some 150,000 tonnes of MMF were imported last fiscal year while about 50 local millers partially produce such items.